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Overview

Supermarket Income REIT (LSE: SUPR) acquires supermarket sites that form a key part of the future model of grocery in the United Kingdom. SUPR aims to provide long-term RPI-linked income, from institutional grade tenants and the potential for capital growth through active asset management.

The Company focuses on grocery stores which are omnichannel, i.e. fulfilling both online and in-person sales. All of the Company’s 45 properties (19 fully owned, 26 owned under a JV) are let to leading UK supermarket operators, diversified by both tenant and geography.

The Company provides investors with attractive, long-dated, secure, inflation-linked, growing income with the potential for capital appreciation over the longer term and targets a 7% to 10% p.a. total shareholder return over the medium term. The Company has increased its dividend target in line with UK RPI inflation each year.

Atrato Capital is the Company’s Investment Adviser.

www.supermarketincomereit.com

Directors

  • Nick Hewson (NE Chair) – co-founder, CEO & Chair of Grantchester Holdings plc, NED at Redrow plc.
  • Vince Prior (Snr Ind Dir) – former Head of Property Investment at Sainsbury’s.
  • Ben Green (Principal Atrato Cap.) – completed £4 billion of supermarket sale & leaseback transactions at Barclays, Lloyds and Goldman Sachs
  • Steve Windsor (Principal Atrato Cap.) – former partner at Goldman Sachs specialising in finance and risk management.
  • Steven Noble (Atrato Cap.) – 9yrs at Lloyds. Negotiated and executed >£240m of Supermarket Property transactions.
  • Natalie Markham (Atrato Cap.) – previously CFO at Macquarie Global Property Advisors Europe

Financials

P&LJune 2020
£~000
June 2019
£~000
Rental income26,35217,231
Admin & other expenses(5,184)(3,088)
Operating Profit37,66614,790
Profit for the period32,76310,593
BALANCE SHEETJune 2020
£~000
June 2019
£~000
Investment Properties539,410368,230
Cash & cash equivalents20,3539,898
Total Assets617,546381,649
Bank borrowings126,791143,708
Total liabilities140,385151,179
Net assets477,161230,470

Peer Group

  • Secure Income REIT (AIM: SIR): generates long term income from real estate investments.
  • Target Healthcare REIT (LON: THRL): invests in purpose built care homes.
  • Impact Healthcare REIT (LON: IHR): invests in healthcare real estate opportunities
  • Tritax Big Box REIT (LON: BBOX): invests in very large logistics warehouse

Major Shareholders

  • Quilter Cheviot- 11.11%
  • Smith & Williamson – 7.02%
  • BMO Global AM – 6.19%
  • Premier Fund Management – 6.01%
  • West Yorkshire Super Fund – 5.91%
  • Canaccord Genuity Wealth – 5.84%
  • Close AM – 5.67%
  • River & Mercantile – 5.64%
  • TR Property Investment Trust – 4.71%

Macro Indicators

IGD Forecasts:

  • UK Supermarket expenditure to grow from £106bn in 2018 to £113bn in 2023
  • Online grocery spending to grow from £11bn to £17bn in the same period
  • 74% of online grocery orders are fulfilled in supermarkets

Media Coverage

Thisismoney.co.uk (Feb 2019)
“SMALL CAP SHARE IDEAS: Supermarket Income Reit’s copper-bottomed returns hit the mark for SIPP and other investors”

Shares (Apr 2018)
“Supermarket Income REIT invests £210.5m in first quarter, declares dividend”

Broker Coverage

Goodbody (July 2018):
“We are forecasting continued expansion of SUPR as the portfolio and income streams grow. While the benefits of an inflation-link on long-term leases will drive NAV upside and continued dividend growth…This will be driven by the unique asset selection skills of management and knowledge of the market.”

Stifel (Apr 2018)
“Year to date, Supermarket REIT’s shares have risen 1%, out-performing the sector which is down 4%. We believe that the shares are supported by the high dividend yield of 5.4% (versus the REIT average of 3.9%), which we forecast to grow in line with inflation, backed by long unexpired leases that are all RPI-linked, and with a high quality tenant covenant.”

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